WTO members indicate extensive preferences to enact the LDC services waiver

9 February 2015

Several WTO members indicated concrete sectors and modes of supply where they intend to provide preferential treatment to least developed countries’ (LDCs) services and services suppliers at a high-level meeting on 5 February.

Most of the preferences presented at last Thursday’s WTO Council for Trade and Services (CTS) build on offers that have previously been made by members in the context of the Doha Round negotiations. In addition, some members have offered to add new commitments and/or establish equivalence with preferences that they have granted in their most liberal FTAs.

Those unilateral preferences for LDCs services exports will first need to go through respective preference givers’ domestic legal procedures and subsequently be notified at the WTO before they become binding. 

Several LDC delegates qualified the outcome of the meeting – which was attended by trade ministers from Uganda and Bangladesh – as “impressive” and “unexpected.”

The quality of the engagement and depth of the signals presented to ‘operationalise’ the waiver were acknowledged by several delegates at the end of the high-level gathering.

The meeting took place, as envisaged under the terms of the 2013 Bali Ministerial Decision, six months after the LDC Group submitted its collective request in July 2014 regarding the preferential treatment it wanted to see for LDC services exports. (See Bridges Africa, 25 July 2014)   In order to release the potential economic benefit of the waiver, the Council on Trade in Services was instructed at the 2013 WTO Ministerial Conference to launch a process aimed at promoting ‘‘the expeditious and effective operationalisation" of the waiver.

The LDC services waiver decision stems from the outcome from a previous WTO Ministerial Conference held in Geneva, Switzerland in 2011. However, in the two years that followed, no preferences had been requested by LDCs or granted to them, prompting WTO members to reconsider ways to move this decision forward.

Extensive preferences

28 WTO members indicated sectors and modes where they were considering providing preferences as well as support for projects on technical cooperation. Seventeen other members signalled that preferences were currently under consideration.

Australia, Brazil, Chile, China, the EU, Hong Kong, India, Japan, Liechtenstein, Mexico, Norway, South Korea, Singapore, Taiwan, and Thailand were among the countries that made pledges during the meeting.

Other countries said that on-going consultations were taking place and were expected to lead to preferences in the coming months.

“The meeting represented a constructive way forward and focused on concrete deliverables,” said another developed country delegate.

Some officials were more sceptical, telling Bridges Africa that what remains to be seen is how these pledges are turned into practice. “We need to see all this in black and white,” said an African delegate.

“The question is now to assess the commercial value of the pledges that were made for LDCs,” said another LDC delegate.

The lack of certainty about the legal value of such unilateral preferences was stressed by one delegate who specified that it was not clear whether they were just statements of good faith to act or legally binding.

Wide coverage

With regard to Mode 4 – the mode of supply of most interest for LDCs as it involves the movement of persons across borders – some of the preferences include new commitments to extend the period of stay for some LDC contractual services suppliers. These include, for example, independent professionals, graduate trainees, installers, and intra-corporate transferees, as well as new categories of services professionals.

Potential preferences signalled by members under Mode 1, which involves cross-border trade, and Mode 3, which deals with supply of services through commercial presence, also include a variety of new sectors and sub-sectors.

These include, for instance, business services such as engineering, translation and interpretation services, project management, and consulting; computer-related services; financial services; travel and tourism; maritime services such as freight transportation and cargo handling; and air transport services, including ground handling and computer reservation systems.

India indicated preferential treatment in technical assistance and market access with pledges in new sectors, such as engineering services and computer-related services. Additionally, New Delhi proposed waiving visa fees for LDC applicants applying for business or employment visas to ensure “real and commercially meaningful” market access for LDC services suppliers.

One developed country delegate indicated that China made interesting signals as well.

The EU’s pledges are based on its Doha Round offer and cover the traditional areas of the WTO’s General Agreement on Trade in Services (GATS), including making available to LDCs key elements of the improvements in Mode 4 access as well as market-opening measures included in its recent FTAs, such as in the Economic Partnership Agreement (EPA) with the Caribbean Community (CARICOM) members.

Trade observers indicate that there is not yet any indication about the exact coverage and extent of the proposed sectoral preferences for the LDCs by the EU, only its pledge that these will be “significant.”

The United States emphasised that the services waiver should be part of a broader discussion about LDC services regulatory reform and increasing capacity to actually export services. According to the US’ statement, a copy of which has been seen by Bridges Africa, “obtaining preferential access to a foreign market may be meaningless without the capacity to serve domestic markets.”

“We view the waiver as simply one tool in a whole arsenal of actions that may be taken to help address both supply side and demand side shortcomings for LDC services markets,” the US statement says. 

The US also specified that they already have a “very open market for services,” and that as a result identifying areas where Washington could offer preferences has proven challenging, given that LDC services and services suppliers already receive broad access to the US market.

Extension of TISA preferences to LDCs?

The United States has stated its intent to give LDCs the same level of access, “to the extent feasible,” to the US services market that Washington will provide under the Trade in Services Agreement (TiSA) – a plurilateral agreement on services trade currently under negotiation by a 23-member group that also includes the EU.

“This approach will still require broader consultation,” specified the US statement.

The US added that new disciplines being discussed under TISA – such as greater transparency and good governance provisions in the area of domestic regulations and professional services, along with disciplines in the area of e-commerce – could constitute areas where LDCS may see important gains “should they so choose to adopt them.”

Technical assistance

Several members announced various technical assistance initiatives to improve LDC services export capacity. The initiatives include training programmes for LDC service suppliers and support to upgrade infrastructure.

A number of countries indicated that they already provide technical assistance through multilateral channels and reiterated the need to make optimal use of existing Aid for Trade channels and capacity building projects to be linked to the LDC services waiver implementation process.

Aid for Trade is a WTO led-initiative intended to address various supply-side and trade-related infrastructure constraints that developing countries and LDCs face, including across service sectors.

India has proposed earmarking a share of technical assistance exclusively for LDCs and designing a new scheme to address the supply-side constraints in the services sector of LDCs.      

Australia has also signalled additional funding for technical assistance.

It was indicated that trade in services will be one of the main topics addressed during this year’s WTO Global Aid for Trade Review, a biennial event which will be held in Geneva from 30 June-2 July.

New deadline on the horizon

WTO Director-General Roberto Azevêdo will now discuss the outcome of the high-level meeting with the LDC Group on 18 February.

A CTS meeting will then be held on 19 March, where pledges  are expected to be assessed. In the meantime, an assessment report will be prepared by the LDC Group in order to evaluate the commercial value of the preferences on the table and the ensuing need for capacity building in the LDCs concerned.

The timing of the operationalisation of the waiver has often been referred to as crucial in past discussions. As Amelia Anne Kyambadde, Uganda’s Minister of Trade, Industry, and Cooperatives, explained on behalf of the LDC Group, the waiver has “a shelf life of only 15 years,” referring to how long the waiver is set to last from the date of its adoption.

Of these 15 years, “three years have slipped away with no notifications of commitments from members in favour of services preferences to LDCs,” the minister said.

Preferences will be followed up by formal notifications to the CTS specifying the actual preferences. Members agreed that they should endeavour to do this by 31 July at the latest, though preferably at the earliest possible opportunity.

A number of countries have already expressed their willingness to notify their preferences to the CTS in the “near future”.

ICTSD reporting.


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